WAYNE O'LEARY

Farmers Take Slow Boat to China

One of the least analyzed aspects of the recent enactment of
"permanent normal trading relations" with China, the crucial step in
that nation's pending WTO membership, is the impact it will have on
world agriculture. China's entry into the global market has been
celebrated as a potential boon to American farmers, with the vast
Chinese mainland market fully opened to US wheat, corn, rice, meat
products, and other commodities. Someone will certainly benefit, but
it won't be the three-quarters of American farmers who shared just 7
percent of the market value of US agricultural products sold in the
late 1990s.

It also won't be Chinese farmers. Free trade in agriculture is
expected to displace an estimated 10 million peasant farmers in
China, where two-thirds of the population still tills the land.
Agricultural exports, heretofore subsidized by the Communist
government, will now rise or fall according to the global
marketplace, and drastically lowered food-import tariffs will open
the door wide to American agribusiness. China's wheat imports from
the US, for example, are expected to rise from two to five million
tons a year, once Chinese WTO membership is finalized.

Sounds like a prescription for the return to health of the
perennially struggling American family farm, doesn't it? Not so fast.
For starters, China's primitive port facilities are not yet
physically ready to receive the bounty of the American heartland, and
according to the English-language China Daily, the Chinese
farm population is "not mentally ready to accept the fact that the
country's agricultural market will soon become part of a battlefield
for international traders." China's predominantly rural populace has
a tradition of self-sufficiency; its subsistence-oriented farmers
grow and consume much of their own food and may continue to do so in
large numbers for the foreseeable future.

But let's not dwell on the negative. Assume, for the moment, that
American agricultural imports are welcomed with open arms and achieve
dominance in the Chinese market. What then? There exists an
intriguing precedent to suggest the answer. Since 1986, the booming
US rice trade with Haiti (200,000 tons of exports per year), a result
of IMF pressure on that island nation to open its protected markets
in return for World Bank loans, has decimated native Haitian
agriculture and made local consumers dependent on US corporate
suppliers for their rice staple. Yet, it has done precious little for
American farmers.

The modern American rice business is, in the words of grain-trade
analyst Dan Morgan, a high-technology, capital-intensive enterprise,"
carried on with tractors, airplanes, elaborate irrigation and
drainage systems, and few people. Although important as an export
crop, rice occupies a minimal number of US farmers at the cultivation
stage; its production and sale is essentially an agribusiness
involving large economic units, and it could well be the model for a
future, export-driven American agriculture.

Even with respect to more labor-intensive crops, the benefits of
expanded trade will be unevenly allocated. The rewards for opening
China -- whether to rice, wheat, or some other farm commodity -- will
not go to small-scale growers, but to the agribusiness giants
(Cargill, Continental and others) engaged in large-scale processing,
trading, and exporting. As testimony before the House Agriculture
Committee in 1999 made clear, American farmers (who average only a 2
to 3 percent annual return) sell almost their entire production at
low domestic prices to local or regional processing and storage
facilities, which act as conduits for the multinational exporters
that control its ultimate disposition and set its final value. No
matter what the outlook for exports, family farmers will still
receive either a steadily shrinking market price from an increasingly
monopolistic U.S. market, or a gradually diminishing support price,
courtesy of the "reformed" federal farm program.

In short, the answer to the ongoing travails of America's family
farmers lies not with globalized agricultural trade, but with a
change in the domestic farm program -- specifically a repeal of the
justly maligned 1996 subsidy phase-out legislation that reversed 60
years of imperfect but necessary agricultural price supports. Farming
is one of those industries -- fishing is another -- that requires
federal aid to survive hard times in a socially desirable form based
on family ownership and relatively small units of production. By
denying such aid, the ludicrously named Freedom to Farm Act has
accelerated a slow, decades-long decline in economic democracy on the
land to the point where the number of American farms (two million) is
now one-third what it was 50 years ago. Worse still, only half of
these remaining farms operate full-time, and only half make money for
their owners.

Something is obviously amiss here, but the solution is not a
simple return to the status quo ante of pre-1996, when wealthy,
independent growers and corporate factory-farms got the lion's share
of all federal agricultural subsidies and gave price supports a bad
name. Rather, it lies with an old idea that has lain dormant for more
than 50 years, but improves with age like good wine. I'm speaking of
the Truman administration's far-sighted 1949 proposal to maintain a
free market for corporate agriculture, while subsidizing more
vulnerable family-sized farms in times of depressed prices.

The so-called Brannan Plan, named after President Truman's
Agriculture Secretary Charles F. Brannan, would have shifted the
emphasis from across-the-board "commodity purchases" (the
indiscriminate buying and storing of surplus crops by the federal
government, when prices fall below established parity or fair-price
levels) to selective "production payments" (direct payments to
certain farmers of the difference between any sub-parity free-market
price and the parity or support price). The key provision: These
payments would have been made only to those farms operating below a
set production level, so that the program would (in the president's
words) "maintain a decent standard of living for ordinary farm
families," while at the same time "agricultural corporations would
not be able to grow fat on it." As a salutary byproduct, consumers
would have benefitted from periodically low free-market prices,
instead of seeing crops warehoused to force prices artificially
higher.

Regrettably, the Brannan Plan was rejected by Congress at the
urging of the conservative American Farm Bureau Federation, and the
existing commodity-purchase farm program, which Truman contended
mainly favored acreage-rich corporations, continued on down to our
own time -- until its 1996 demise. Now, however, in the wake of the
Freedom to Farm Act's legislative overkill, the 1949 Fair Deal
proposal is being talked about again. Senator Byron Dorgan (D-N.D.),
whose state lost 10 percent of its farmers in the late 1990s, has
proposed reviving the Truman-Brannan approach and substituting it for
the currently disastrous phase-out of subsidies. It's an idea whose
time may finally have come.

Harry Truman expressed the need best: "The old laissez-faire
theorists tell us that the answer [to recurring farm
problems] is to cut down on producing units until the fittest
survive. But this theory is without humanity, for in human terms it
means the breakup of homes, the destruction of families, and the
surrender of the family farm to the absentee landlord or the
corporate owner." Amen.